- Nothing in the OBCA or CBCA incorporation process asks what the corporation currently does or whether it holds any assets yet.
- Incorporate the holding company first, filing Articles of Incorporation under the OBCA (the current filing fee is $300 as of mid-2026 — verify the current amount before you file).
- Moving surplus cash or dividends up to the holding company keeps it insulated from the day-to-day risk of the operating business, rather than leaving accumulated profit sitting inside…
Some entrepreneurs are told, early on, to "set up a holding company first" — before they've even incorporated the business that will actually generate revenue. It sounds backwards. Does the operating business have to exist before a holding company can? The short answer is no: you can incorporate a holding company first in Ontario, and plenty of founders do exactly that on purpose.
Here's how the sequencing actually works, why some owners choose it, and what it costs to run two corporations instead of one.
Yes — Incorporation Doesn't Require an Existing Business
Nothing in the OBCA or CBCA incorporation process asks what the corporation currently does or whether it holds any assets yet. A corporation can be incorporated purely to exist as a shell that will later hold shares of another company, real estate, investments, or accumulated cash. There's no legal requirement that an operating business has to incorporate first, with a holding structure layered on afterward — the order is a planning choice, not a rule.
How the Sequencing Typically Works
- Incorporate the holding company first, filing Articles of Incorporation under the OBCA (the current filing fee is $300 as of mid-2026 — verify the current amount before you file).
- Issue shares of the holding company to the founder(s).
- Incorporate the operating company as a second, separate corporation — a separate filing and separate fee.
- Have the holding company subscribe for shares of the operating company (or transfer existing shares into it), so the holding company ends up owning the operating company.
- Maintain separate minute books, separate bank accounts, and separate corporate records for each corporation going forward, since they are two distinct legal persons.
Why Some Owners Set It Up This Way
- Creditor-proofing. Moving surplus cash or dividends up to the holding company keeps it insulated from the day-to-day risk of the operating business, rather than leaving accumulated profit sitting inside the operating company where a future lawsuit or creditor claim against that business could reach it.
- Future flexibility. A holding company already in place makes it simpler to add a second or third operating subsidiary later, rather than restructuring the ownership after the fact.
- Estate and succession planning. Shares can sometimes be structured to make a future transition to family members or a trust smoother — a matter for your lawyer and accountant to plan together, well before it's needed.
The Ongoing Cost of Running Two Corporations
Setting up the holding company first isn't a one-time cost — it's an ongoing administrative commitment:
- Two full sets of corporate records and minute books to maintain
- Two corporations to keep in good standing under the Corporations Information Act, with their own filings
- Two accounting files, even if the holding company itself has minimal activity
- Two entities' worth of bank accounts, resolutions, and record-keeping discipline
None of this is prohibitive, but it's a real, recurring cost that should factor into the decision — not just the initial filing fees.
Is a Holding Company Always Worth Setting Up First?
Not necessarily. For a very early-stage business with no accumulated profit yet and no imminent risk, some advisors suggest starting with a single operating corporation and adding a holding company layer later, once there's actually something worth protecting. Others prefer to build the full structure from day one to avoid a more complex reorganization down the road. This is a strategic call best made with your lawyer and accountant together, based on your specific plans and risk tolerance.
Frequently asked questions
Does the holding company need to do anything once it's incorporated?
Not necessarily right away — it can simply sit as a shareholder of the operating company. But it still has its own ongoing filing and record-keeping obligations even while it isn't actively running anything.
Can I convert my existing single corporation into a holdco/opco structure later?
Generally yes, through a reorganization — often involving incorporating a new company and using a share exchange or similar mechanism — but this is more complex and costly than setting up both structures from the start. It usually needs tailored legal and tax advice.
Do the two corporations need separate bank accounts?
Yes. Since they're separate legal persons, each corporation should have its own bank account, accounting records, and minute book to preserve the legal separation between them.
Does the holding company have to be incorporated in the same jurisdiction as the operating business?
Not necessarily — a holding company can be incorporated under the OBCA or the CBCA regardless of where the operating business is based, though there can be practical reasons to align them. Discuss which fits your plans with your lawyer and accountant.
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